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Corus Bank – One of the Many Publicly Owned Real Estate-Related Companies to See Trouble Ahead

September 10, 2007 by Lucas Lechuga

In previous posts, I’ve revealed that Corus Bank is a prominent lender to condo developers in Miami Miami Beach. A recently published article by entitled “Corus Swept Up in Florida Condo Undertow” may reveal that my analysis of Corus Bank was actually conservative. The article revealed that, for good reason, “55 percent of the stock’s float is being sold short, meaning that investors are betting on a decline in the stock’s value”.

This figure is as of no surprise to me knowing the full extent of Corus Bank’s lending practices to Miami and Miami Beach developments such as Ivy at Riverfront, Mint at Riverfront, Paramount Bay, Infinity at Brickell, Jade Ocean, Continuum South Beach North Tower, Artecity, Marina Blue, Caribbean, Quantum on the Bay and Onyx on the Bay. My guess is that at least six of the ten developments will have problems that extend far beyond what many have imagined.

Since August 4, 2007, when I mentioned Corus Bank (NASDAQ: CORS) in one of my posts, the stock has lost a little over 22 percent of its value. I am definitely not saying that I had anything to do with that. Much of the loss was due to two articles about Corus Bank that were written by towards the end of August. People have begun to see that Corus Bank has troubled times ahead if condo developers in Miami and Miami Beach have difficulty closing on their units.

Recently, Corus Bank paid its shareholders a cash dividend of 25 cents per share. At first glance, this news may sound promising for Corus Bank since it shows that they have extra cash on-hand. However, my sources tell me otherwise. Joseph Glickman, Chairman of Corus Bank, and his family control about 50 percent of the company. The cash dividend may be a way of getting cash out of the company.

If Mr. Glickman and his family had confidence in the company’s future and felt that the stock was undervalued then they would instead use the company cash to buy back its own stock. The family would then control a larger stake in the company. Earlier this year, the board authorized a share repurchase program but they have yet to repurchase one share of stock.

My source has disclosed to me the following: “Years ago Corus used to include in their 10-K Annual Report an analysis of their loan losses should a serious real estate recession occur. 2004 was the last time they performed the analysis (by the way, interesting to note is that they stopped providing this disclosure to shareholders). You can find the one from 2004 here. Just go to page 70 of the Annual Report for the “Commercial Real Estate Risk” section. Back then they were estimating that they would incur $143M in loan losses from their $5.3B loan portfolio should such a serious real estate recession occur. Well, fast forward three years and their loan balance has grown to $8B for the most recent quarter (6/30/07). Applying the same ratio from the 2004 analysis, I estimate that their loan losses could exceed $200M today. That’s more than a quarter of their book value. Now of course this is all hypothetical. Corus did not disclose how they were arriving at those numbers, or how they were defining a ‘serious real estate recession’. It’s garbage-in garbage-out as they say, but at least the analysis they used to perform gives you some numbers you can work with. I honestly think it could be worse though.”

It will be interesting to see in the following 12-24 months where shares of Corus Bank will be given the large amount of money that they loaned to Miami and Miami Beach developers. The following is a list of the Miami and Miami Beach condo developments that they loaned money to, as well as the amount of each loan:

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8 Comments on "Corus Bank – One of the Many Publicly Owned Real Estate-Related Companies to See Trouble Ahead"

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Kevin Tomlinson

Very interesting info, Lucas.

david rappoport

great job any other banks with so much exposure in miami?


They may have 200 million in non- performing loans, but since these loans are secured by Real Estate and most of their loans are made at 65% of the cost, it doesn’t mean that even if they foreclose on these loans, they’ll lose money.


I heard the Corus Bank is filing for forclosure for ArteCity Condo on South Beach. The law firm of DK Philips ( I understand has many lawsuits against the developer. What will happen to everyones deposits?


Yes. I just heard that Corus Bank is really going to foreclosure on the ENTIRE project. This is really scarey. What happens to our deposits? Will this lead to bankruptcy by the developer? All I know is that there is really one law firm in Miami that is sucessfully suing the developer. It is called DK PHILIPS and I believe they are Any new information?


I just read an article that came out on May 30, 2008, in the South Florida Business Journal (just google) about Corus Bank and ArteCity. Not good. All interested should read.


[…] reading any further, please read the post I published on September 10, 2007 entitled, “Corus Bank – One of the Many Publicly Owned Real Estate-Related Companies to See Trouble Ahead“.  There are two things that amaze me most about that post.  One, the growth in the number […]


Lucas, I just want to congratulate you on a such a fine picec of analysis! you should use your skill toward the stock market… pls email me if you care to see what i think is missing in that analysis and your recent post.

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